TORONTO, March 5, 2021
/CNW/ - Bridgemarq Real Estate Services Inc. ("Bridgemarq" or the
"Company") (TSX: BRE) announced today its annual consolidated
financial results for 2020 and the approval of a monthly dividend
to holders of the Company's restricted voting shares.
HIGHLIGHTS
- Revenue for 2020 was $40.3
million compared to $44.3
million for 2019.
- The Company recorded net earnings of $0.8 million or $0.08 per share, on a fully diluted basis
compared to earnings of $3.1 million
or $0.32 per share in 2019.
- The Company generated Distributable Cash Flow for the year of
$13.9 million compared to
$17.2 million in 2019 as the Company
implemented an alternative fee plan in April to support its network
of franchisees in the face of the pandemic.
- Despite lower Distributable Cash Flow, Bridgemarq was able to
maintain its dividends consistent with 2019 levels as a result of a
previously announced agreement to defer certain payments of
management fees and distributions payable to holders of the
Company's Exchangeable Units.
- The Board of Directors approved a dividend to shareholders of
$0.1125 per restricted voting share
payable April 30, 2021 to
shareholders of record on March 31,
2021.
FOURTH QUARTER OPERATING RESULTS
For the twelve months ending December 31,
2020, Revenues were $40.3
million compared to $44.3
million in 2019. During the fourth quarter, revenues were
$7.1 million, compared to
$10.7 million in the same period in
2019. In April, 2020, as major market sales volumes fell
significantly below historical levels, the Company introduced
the Pandemic Fee Relief Plan (the "Relief Plan"). Under this
temporary alternative to its standard fee plan, the Company
suspended fixed franchise fees for approximately 82% of its network
of REALTORS® and implemented an increased variable fee of 3%-4.2%
of gross commission income, up to a cap. Strong real estate markets
in the third quarter contributed to large number of REALTORS®
reaching their cap, at which point they pay no franchise fees for
the rest of the year, negatively impacting Q4 revenues.
"The Pandemic Fee Relief Plan, introduced in the second quarter
of 2020 when our agents were facing sales volumes that had dropped
as much as two-thirds under national shelter-at-home orders, helped
them weather the unprecedented economic slowdown," said
Phil Soper, President and Chief
Executive Officer, Bridgemarq Real Estate Services Inc. "Effective
January 1, 2021, we reverted to our
traditional fee plan which is bias to fixed franchise fees. It is
worth noting that 2020's Relief Plan was effective in limiting
salesforce attrition to less than one half of one per
cent."
For the year, the Company recorded net earnings of $0.8 million compared to $3.1 million in 2019. Lower revenues and a
larger loss on the revaluation of the Company's interest rate swap
were partly offset by lower amortization expense and a gain related
to the deferral of certain payments of management fees and
distributions payable to holders of the Company's Exchangeable
Units. For the fourth quarter, the Company generated a net loss of
$8.0 million, compared to net
earnings of $1.3 million in the
fourth quarter of 2019, impacted by lower revenues and a loss on
the revaluation of the Exchangeable Units issued by the Company as
a result of an increase in the value of the Company's restricted
voting shares.
Distributable Cash Flow for the year amounted to $13.9 million, $3.3
million lower than the $17.2
million generated in 2019 primarily due to the
implementation of the Relief Plan. Similarly, for the fourth
quarter Distributable Cash Flow amounted to $1.9 million, compared to $4.0 million in 2019.
In May, the Company announced an agreement with Brookfield
Business Partners L.P. (NYSE: BBU) (TSX: BBU.UN) ("Brookfield
Business Partners") and Bridgemarq Real Estate Services Manager
Limited (the "Manager") to defer the payment of a portion of
management fees payable to the Manager and distributions on
Exchangeable Units owned by Brookfield Business Partners.
Payment deferred under this agreement amounted to $5.6 million and provided financial support for
the Company to maintain its distributions to shareholders in 2020
at the same level as 2019.
"Growing demand for housing began mid-year and extended through
the second half," continued Soper. "This resulted in record
breaking sales in many regions from coast-to-coast. While the
economic drag from the pandemic-triggered recession continues to
pose an economic threat, market fundamentals, including low
borrowing costs, are supportive of the real estate industry."
"During 2020, the Company adapted swiftly to pandemic triggered
business and safety challenges, modifying services and introducing
new resources to our network of real estate professionals. The
May 2020 launch of the cloud-based
operating and lead generation platform, rlpSPHERE provides a
future-proof digital ecosystem to enhance agent and brokerage
productivity and profitably," he concluded.
MARKET UPDATE
The market improvement that began in the second quarter of 2019
continued into the first quarter of 2020 until mid-March when
governments across Canada began
placing restrictions on the operation of businesses and social
interaction in an effort to fight the spread of COVID-19. COVID-19
has had dramatic impacts on the Canadian economy and the Canadian
Market. The second quarter of 2020 started off very weak with the
Canadian Market off 58% in April compared to 2019. After
continued weakness in May, June results showed a strong bounce back
with a 13% year-over-year improvement. Demand for real estate
in Canada continued to improve
through the rest of 2020, reaching record levels in many
areas. Overall, the Canadian market improved by 28% compared
to 2019. While the market appears to have to have come back
quickly, it remains to be seen how broader economic factors such as
unemployment, GDP contraction and immigration policy as well as
efforts to vaccinate against the virus will impact this
trend.
CASH DIVIDEND
The Company declared a cash dividend of $0.1125 cents per restricted voting share payable
on April 30, 2021 to shareholders of
record on March 31, 2021. The
dividend distribution represents a target annual dividend of
$1.35 per restricted voting
share.
THE COMPANY NETWORK
As at December 31, 2020, the
Network was comprised of 19,046 REALTORS®, operating
under 289 franchise agreements providing services from 662
locations, with an approximate 16% share of the Canadian
residential real estate market based on 2020 transactional dollar
volume.
CONFERENCE CALL
Bridgemarq Real Estate Services Inc. will host a conference
call on Friday, March 5, 2021 at
10 a.m. ET to discuss its fourth
quarter financial results.
To access the call by telephone, please dial 1-888-231-8191 or
647-427-7450.
To access the call online, please visit:
https://produceredition.webcasts.com/starthere.jsp?ei=1435761&tp_key=c2cabd7cd4
Please connect approximately ten minutes prior to the beginning
of the call to ensure participation.
A recording of the conference call will be available in the
Investor Centre section of the Company's website by Friday, March 19, 2021.
DISTRIBUTABLE CASH FLOW
This news release and accompanying financial statements make
reference to distributable cash flow. Distributable Cash Flow is
defined as operating income before deducting amortization and net
impairment or recovery of intangible assets, minus current income
tax expense and minus cash used in investing activities.
Distributable cash flow is used by the Company to measure the
amount of cash generated from operations which is available to the
Company's shareholders on a diluted basis, where such dilution
represents the total number of shares of the Company that would be
outstanding if holders of exchangeable units converted Class B LP
units into restricted voting shares. The Company uses distributable
cash flow to assess its operating results and the value of its
business and believes that many of its shareholders and analysts
also find this measure useful. Distributable cash flow does not
have any standard meaning prescribed by IFRS and therefore may not
be comparable to similar measures presented by other companies.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking information and other
"forward-looking statements". Words such as "are", "continues",
"enhance", "is", "provides", "remains", "will" and other
expressions that are predictions of or could indicate future events
and trends and that do not relate to historical matters identify
forward-looking statements. Reliance should not be placed on
forward-looking statements because they involve known and unknown
risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to differ
materially from anticipated future results, performance or
achievement expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ
materially from those indicated in the forward-looking statements
include: the duration and effects of the COVID-19 pandemic,
including the impact of COVID-19 on the economy and the Company's
business, the impact of government or other regulatory initiatives
to address the impact of the spread of COVID-19 on the Canadian
economy, including the impact on real estate markets, changes in
the supply or demand of houses for sale in Canada or in any particular region within
Canada, changes in the selling
price for houses in Canada or any
particular region within Canada,
changes in the Company's cash flow as a result of COVID-19, changes
in the Company's strategy with respect to and/or ability to pay
dividends, changes in the productivity of the Company's REALTORS®
or the commissions they charge their customers, changes in
government policy, laws or regulations which could reasonably
affect the housing markets in Canada, consumer response to any changes in
the housing markets in Canada or
any changes in government policy, laws or regulations, changes in
general economic conditions (including interest rates, consumer
confidence and other general economic factors or indicators),
changes in global and regional economic growth, the demand for and
prices of natural resources on local and international markets, the
level of residential real estate transactions, competition from
other real estate brokers or from discount and/or Internet-based
real estate alternatives, the closing of existing real estate
brokerage offices as a result of COVID-19 or otherwise, other
developments in the residential real estate brokerage industry or
the Company that reduce the number of REALTORS® in the Company's
Network or royalty revenue from the Company's Network, our ability
to maintain brand equity through the use of trademarks, the methods
used by shareholders or analysts to evaluate the value of the
Company and its publicly traded securities, changes in tax laws or
regulations, and other risks detailed in the Company's annual
information form, which is filed with securities commissions and
posted on SEDAR at www.sedar.com. Forward-looking information
is based on various material factors or assumptions, which are
based on information currently available to management. Material
factors or assumptions that were applied in drawing conclusions or
making estimates set out in the forward-looking statements include,
but are not limited to: anticipated economic conditions,
anticipated impact of government policies, anticipated financial
performance, anticipated market conditions, business prospects, the
successful execution of the Company's business strategies and
recent regulatory developments, including as the foregoing relate
to COVID-19. The factors underlying current expectations are
dynamic and subject to change. Although the forward-looking
statements contained in this press release are based upon what
management believes are reasonable assumptions, the Company cannot
assure readers that actual results will be consistent with these
forward-looking statements. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law.
About Bridgemarq Real Estate Services
Bridgemarq is a leading provider of services to residential real
estate brokers and a network of approximately 19,000
REALTORS®1. We operate in Canada under the
Royal LePage, Via Capitale and Johnston & Daniel brands. For
more information, go to bridgemarq.com.
Bridgemarq is an affiliate of Brookfield Business Partners, a
business services and industrials company focused on owning and
operating high-quality businesses that benefit from barriers to
entry and/or low production costs. Brookfield Business Partners is
listed on the New York and Toronto stock exchanges. Further information
is available at bbu.brookfield.com.
Bridgemarq Real
Estate Services Inc.
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December
31,
|
December
31,
|
|
|
Balance Sheet
Highlights
|
2020
|
2019
|
|
|
Cash
|
$
|
9,156
|
$
|
5,202
|
|
|
Other current
assets
|
3,171
|
4,943
|
|
|
Total current
assets
|
12,327
|
10,145
|
|
|
Non-current
assets
|
76,632
|
84,648
|
|
|
Total
assets
|
$
|
88,959
|
$
|
94,793
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
1,282
|
$
|
1,210
|
|
|
Interest payable on
Exchangeable Units
|
484
|
484
|
|
|
Dividends payable to
shareholders
|
1,067
|
1,067
|
|
|
Contract transfer
obligation
|
549
|
1,920
|
|
|
Total current
liabilities
|
3,382
|
4,681
|
|
|
Debt
facilities
|
73,379
|
73,338
|
|
|
Deferred
payments
|
5,535
|
-
|
|
|
Other non-current
liabilities
|
5,853
|
4,194
|
|
|
Exchangeable
Units
|
49,249
|
48,983
|
|
|
Total
Liabilities
|
137,398
|
131,196
|
|
|
Shareholders'
deficit
|
(48,439)
|
(36,403)
|
|
|
Total Liabilities
and Shareholders' deficit
|
$
|
88,959
|
$
|
94,793
|
|
|
|
|
|
|
|
|
Three
months
|
Three
months
|
|
|
|
ended
|
ended
|
Year
ended
|
Year ended
|
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
Interim Earnings
Highlights
|
2020
|
2019
|
2020
|
2019
|
Fixed franchise
fees
|
$
|
1,191
|
$
|
7,303
|
$
|
11,247
|
$
|
29,285
|
Variable franchise
fees
|
4,776
|
2,183
|
23,900
|
10,638
|
Other
revenue
|
1,119
|
1,182
|
5,192
|
4,426
|
Revenues
|
7,086
|
10,668
|
40,339
|
44,349
|
|
|
|
|
|
Cost of other
revenue
|
235
|
107
|
716
|
(524)
|
Administration
expenses (recovery)
|
(171)
|
429
|
608
|
(1,196)
|
Management
fees
|
4,185
|
3,730
|
16,875
|
(15,478)
|
Interest
expense
|
758
|
761
|
3,001
|
(3,031)
|
|
2,079
|
5,641
|
19,139
|
24,120
|
Impairment, write-off
and amortization of intangible assets
|
(2,026)
|
(2,663)
|
(8,873)
|
(11,242)
|
Interest on
Exchangeable Units
|
(1,451)
|
(1,451)
|
(5,806)
|
(5,806)
|
Loss on fair value of
Exchangeable Units
|
(6,622)
|
-
|
(266)
|
(499)
|
Gain (loss) on
interest rate swap
|
205
|
659
|
(2,208)
|
(615)
|
Gain on deferred
payments
|
-
|
-
|
1,191
|
-
|
Income tax
expense
|
(82)
|
(675)
|
(2,090)
|
(2,989)
|
Deferred income tax
recovery (expense)
|
(80)
|
(218)
|
(320)
|
107
|
Net and
comprehensive earnings
|
$
|
(7,977)
|
$
|
1,293
|
$
|
767
|
$
|
3,076
|
Basic earnings per
Restricted Voting Share
|
$
|
(0.84)
|
$
|
0.14
|
$
|
0.08
|
$
|
0.32
|
Diluted earnings
per Share
|
$
|
(0.84)
|
$
|
0.14
|
$
|
0.08
|
$
|
0.32
|
|
|
|
|
|
Cash Flow
Highlights
|
|
|
|
|
Cash provided by
operating activities:
|
$
|
1,793
|
$
|
3,638
|
$
|
19,866
|
$
|
15,600
|
Cash used for
investing activities:
|
(84)
|
(944)
|
(3,109)
|
(3,934)
|
Cash used for
financing activities:
|
(3,201)
|
(3,201)
|
(12,803)
|
(10,803)
|
Change in cash for
the period
|
(1,492)
|
(507)
|
3,954
|
863
|
Cash, beginning of
the period
|
10,648
|
5,709
|
5,202
|
4,339
|
Cash, end of the
period
|
$
|
9,156
|
$
|
5,202
|
$
|
9,156
|
$
|
5,202
|
|
|
|
|
|
Distributable Cash
Flow Highlights
|
|
|
|
|
Distributable Cash
Flow
|
$
|
1,913
|
$
|
4,022
|
$
|
13,940
|
$
|
17,197
|
Distributable Cash
Flow per Share
|
$
|
0.15
|
$
|
0.31
|
$
|
1.09
|
$
|
1.34
|
SOURCE Bridgemarq Real Estate Services Inc.